The Corruption of Capitalism: Britain’s Role

Wednesday, 22 October 2014

The Legatum Institute was pleased to host a dinner with Frank Field, MP for Birkenhead and Chair of the Modern Slavery Bill Review, in conversation with Lord Glasman, Labour life peer, on the challenges facing capitalism.

The fall of the Berlin wall showed that there is no alternative to capitalism: left and right agree that no other system can lift so many people so effectively out of poverty. Yet Britain’s capitalists today have run into problems of form (a poor image) and substance (corruption, parochialism, lack of corporate ethos).

A Legatum Institute dinner, entitled ‘The Corruption of Capitalism: Britain’s Role’, invited politicians, academics and business leaders to discuss, under Chatham House rule, how to renew the relationship between the individual and the market.

First and foremost, a company cannot operate solely for short term gain: it is a moral community, that can promote genuine common good by rewarding certain virtues—skilful work, sacrifice, faithfulness. A company can only be sustainable in the long term if it generates trust within, and without. Ticking the box of ‘social corporate responsibility’ is not enough—though investment banks and others pretend that it is.

A company in Britain today cannot afford, however, to operate in a parochial setting: Britain must look out of its shell—not just in terms of trade but in terms of ideas. For instance, we should learn from Germany about the value of vocational rather than ‘mental’ (ie academic) education; we have about 50 per cent of the engineers that we need. How can we expect to compete or grow?

We should learn from Catholic social teaching about the value of the individual and the dignity of even the most humble work. Bonuses, sometimes in excess of a million pounds, jeopardise the sense of proportion inherent in a smooth-running capitalism.

Recognising the value of the workforce at every level is key to motivating that workforce.
Above all, regulations regarding financial services need to change: as long as dirty money can be recycled easily by British banks, there will be no incentives for honesty and no reason to trust.

To prosper, Britain needs to revert to true capitalism, where free agents, motivated by enlightened self-interest, work for a common flourishing.

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